European Capital Markets with a Single Currency

9
The Asset Management Industry in Europe:
Competitive Structure and Performance
under EMU

INGO WALTERThe institutional asset management industry is likely to be one of the largest and most
dynamic parts of the global financial services sector in the years ahead. As of 1996, the
global total of assets under management was estimated at close to US$30 trillion, comprising some US$8.2 trillion in pension fund assets, about US$5.3 trillion in mutual
fund assets, US$6.4 trillion in fiduciary assets controlled by insurance companies, and
perhaps US$7.5 trillion in offshore private client assets.1 Not only will this already
massive industry experience an extraordinary rate of growth in comparison with other
segments of the financial services sector, but cross-border volume--both regional and
global--is likely to take an increasing share of that activity. Much of the action will be
centred in Europe, which remains well behind the United States in institutional asset
management and where many of the global pension problems reside, even as the rapid
growth of performance--oriented managed funds alters the European financial landscape under EMU--including traditional approaches to corporate control.Within this high-growth context, asset management attracts competitors from an
extraordinarily broad range of strategic groups--commercial and universal banks,
investment banks, trust companies, insurance companies, private banks, captive and
independent pension fund managers, mutual fund companies, and various types of
specialist firms. This rich array of contenders, coming at the market from several very
different starting points, competitive resources and strategic objectives, is likely to render the market for institutional asset management a highly competitive one even under
conditions of large size and rapid growth.The underlying drivers of the market for institutional asset management are well
understood. They include the following:

•

A continued broad-based trend towards professional management of discretionary household assets in the form of mutual funds or unit trusts and other types of
collective investment vehicles, a development that has perhaps run much of its
course in some national financial systems but has only begun in others.

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